What happens if you missed the deadline of 31st July to file income tax returns? While an assessee has paid advance tax and TDS (ideally) by 31st March of every year, 31st July is the last date for filing income tax returns (ITR) as set by the Income Tax department. Let us see what happens if you miss the deadline and what penalties you might end up paying.
Before we look at the repercussions, let us quickly see how the years are referenced in income tax lingo. 2009-2010 is called the Previous Year (PY) as that is the year in which you earned your income while 2010-2011 is called the Assessment Year (AY) as you are assessing your income in 2010-2011 for the Previous Year 2009-2010. Right through this article, we will use PY and AY to mean 2009-2010 and 2010-2011 respectively.
If you missed the income tax return (ITR) filing deadline of 31st July, the income tax department gives a reprieve by allowing you to file it after 31st July without any penalty if and only if you file before March 31st 2011 and you have no tax liability to pay to the government. This means that you have all the 12 months of the Assessment Year to file your returns provided your tax liability is zero.
After the first year is over, you have to pay penalties to the tune of Rs 5,000/-. So for this Previous Year, if you do not file income tax returns by 31st March 2011, you will pay a flat penalty of Rs 5,000/-. This penalty can be waived if you have a genuine reason for not having filed your ITR.
So, in case of zero tax liability:
- income tax can be paid till end of the Assessment Year with no penalty
- income tax can be paid beyond Assessment Year with a penalty of Rs 5,000/-
What happens if you have a tax liability and have missed the income tax return filing deadline?
In such a case, you will have to pay 1% per month on the amount of liability starting from August. So, from August 2010, you will pay a penalty of 1% per month on your liability till the time you file your returns. Obviously, if you have a liability and are filing your ITR after the Assessment Year is over, you will pay 1% per month and Rs 5000/- as penalty.
So, in case of tax liability:
- income tax can be paid with a penalty of 1% per month on the outstanding tax liability
- income tax can be paid till end of the Assessment Year with no penalty (of Rs 5,000/-)
- income tax can be paid beyond Assessment Year with a penalty of Rs 5,000/-
Other caveats you need to be aware of if you are filing your ITR after the deadline of 31st July :
Be aware of:
- You cannot carry over/forward losses that you have incurred in this year.
- In case of refund, interest will be calculated from the date you filed your return instead of 1st April.
- You will not be allowed to revise your return in case of mistake in original return.
- In fact, the returns can be filed within two years. So for this Previous Year (2009-2010), you have time till 31st March 2012 to file your returns subject to penalties and some benefits that you lose. If you do not file within these 2 years, you might not be allowed to file it at all.
The conclusion is that, you are better off dead than to be late to file your income tax returns. Jokes apart, the benefits of filing your ITR are more than not. So, don't delay this important task for later. Do it now. Death and the taxman cometh! Both are inevitable.
